Alex Singleton is part of the Daily Telegraph's leader-writing team and is a contributing editor at the Sunday Telegraph. You can visit his personal site and follow him on Twitter.

Time to consign council tax to history

The government's backhanded attempt at a council tax revaluation is revealed in the Sunday Telegraph. Given that some householders already face a council tax rise of 11 per cent this year, this makes especially unwelcome news.

Council tax is not just wrong because it is too high, however. It is wrong in principle, too. Those who spend their money on conspicuous consumption normally pay tax only once on their spending (in the form of VAT and duties at the time of purchase). Meanwhile, those who choose to save in property are taxed repeatedly each and every year.

This relentless, yearly tax means that many elderly people, emotionally attached to homes where they have lived for decades, find themselves in difficult financial circumstances. Entrepreneurial individuals establishing new businesses, not yet bringing in much income, can find council tax demands a nightmare.

The Prime Minister would do well to remember that one of Adam Smith's principles of taxation is that people should contribute in proportion to their abilities. This is something that council tax ignores. But it is unlikely that the current government will do anything to harm this cash-cow. "None of my budgets have followed Adam Smith's principles," Gordon Brown told me shortly before becoming Prime Minister, "except perhaps one where I had a copy of the Wealth of Nations at the dispatch box. Who knows? Maybe it was my best."

Nevertheless, others are thinking of alternative ways of replacing council tax. The Liberal Democrats have proposed a local income tax. The favoured approach among Conservative intellectuals centred around the Direct Democracy campaign is a local sales tax. This would replace VAT andÂ would be set by local authorities. It would encourage tax competition between local authorities and might be just what local democracy needs.